Historically, the clearing of negotiable instruments, such as checks and money orders, has been a paper intensive process. For example, a customer may enter a financial institution, such as his bank, and present a negotiable instrument for a particular monetary value to be cashed or deposited. The bank or financial institution, referred to as the “bank of first deposit,” may then present the customer with the monetary value of the negotiable instrument. In many instances, the bank or other financial institution that issued the negotiable instrument, referred to as the “issuing bank,” is not the same as the bank of first deposit. Therefore, the bank of first deposit that has cashed or deposited the negotiable instrument must collect the appropriate monetary value from the issuing bank.
Typically, this would involve the bank of first deposit sending the negotiable instrument to their clearinghouse (alternatively referred to as their check processor). This clearinghouse may then route the negotiable instrument to second clearinghouse associated with the issuing bank. This second clearinghouse may process and verify the negotiable instrument. Thereafter, the clearinghouse may transmit or send funds to the bank of first deposit for the value of the negotiable instrument. Considering that banks and financial institutions must deal with cashing or depositing huge volumes of negotiable instruments on a daily basis, including negotiable instruments received from issuing institutions throughout the country and world, handling negotiable instruments is an expensive, time-consuming, and cumbersome process. Some banks or financial institutions may even go so far as to charter private airplanes to deliver negotiable instruments to the appropriate clearinghouse or check processor.
As may be expected, a percentage of transactions using negotiable instruments involve illegal, suspicious, or illicit activities. These illegal, suspicious, or illicit activities may include money laundering, such as funding for drug trafficking or terrorist activities. In some instances, banks and financial institutions may be under a legal obligation to investigate and/or report suspicious activity to an appropriate government agency. The problem of money laundering may be particularly pronounced when dealing with money orders.
A personal check may typically include certain information, such as the payor's identity, the bank account the funds are being withdrawn from, and the recipient's identity. Depending on the monetary value of the money order, not all of this information may be present or collected by either the issuing financial institution or the bank of first deposit for a money order. For example, the recipient's identity, the source of the funds, or the payor's identity may not be present on the money order. Therefore, it may be more difficult to determine if the negotiable instrument is being used for money laundering or other illicit or illegal activities.
In helping to prevent money laundering or other illegal or illicit activities, the delivery of negotiable instruments to the clearinghouse or check processor associated with the issuing financial institution may be considered to have certain advantages. For example, receiving the physical negotiable instrument allowed for certain characteristics of the physical negotiable instrument to be categorized, reviewed, and/or investigated. The negotiable instruments, that had been cashed or deposited and subsequently returned to the issuing financial institution (or the clearinghouse associated with the issuing bank), could be sorted according to varying criteria.
However, the process of physically moving paper negotiable instruments is being replaced by electronic negotiable instrument processing, or, in other words, the transmission of an electronic image of a negotiated instrument with associated data fields from the bank of first deposit (or its associated clearinghouse) to the issuing bank (or associated clearinghouse) as opposed to the physical negotiable instrument. In such an electronic processing scheme, the physical negotiable instrument may be destroyed once an associated image has been created. The methods to examine or investigate properties or aspects of the negotiable instrument may be changed in order to detect suspicious, illegal, and/or illicit activities in an electronic processing environment. Further, these new methods may need to be monitored to determine whether they are successfully detecting such suspicious, illegal, and/or illicit activities and are in compliance with the law.
The following invention addresses this and other problems.